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The Retailer Survival Guide

12 ways to improve your profitability

The Retailer Survival Guide

From lube to love dolls, selling sex-related products can be tricky business. In a constantly changing market that demands a retailer's full attention, the ability to follow a handful of helpful guidelines can make the difference between success and failure.

After the success of the ANB-sponsored "Retailer Boot Camp" at the 2007 AVN Novelty Expo (from which some of this information was culled), we talked to a number of successful retailers and other industry pros to create this succinct "survival guide" to help your business prosper. Read it-and reap.

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1) Know your customers-and competitors

The better you know your customers, the better you'll be able to know your business and evaluate what works for you. To make correct decisions, you need to see The Big Picture when it comes to clientele.

"Find your niche, and stick with it," advises Tom Berger, CEO of Florida-based Fairvilla Megastores. "Who do I want to be my niche? Gay? Couples? Discount?" Small or large, Berger encourages every retailer to answer these important questions to get a grasp on who they want walking into their store.

Berger also believes joining the National Retail Federation is money well spent, since retailers can apply information from NRF studies to their own stores. "For $285 a year, you, too, would know that 67 percent of women own more than one adult product [and] that we have seven seconds to impress a customer with our packaging enough to make a sale," he says. Nuggets like these can make a difference in any retailer's bottom line.

Businesses need to know who their competitors are. Once the competitors are identified, a store must be distinct-or better.

Are you the only couple's store in a sea of hardcore male stores? Host events to draw your demographic. Are you the only person carrying a best-selling product? Be sure to put that item in your advertising and window displays. Keep an eye on the marketplace, and know where your company stands within it.

"Our business is like a bus," says Phyllis Heppenstall, founder and CEO of retailer and distributor Peekay Inc. "We need to decide what direction it's going in and if we are putting our staff in the right seats within the business for it to run successfully."

 

2) Keep your customers coming back

Initially, first-time patrons arrive in your store through outside means: seeing an ad or a sign or just because of personal interest. The trick is to meet their immediate needs and create a return customer. A one-time customer buys because of price; a regular customer purchases because of service.

Give customers a reason to come back. Retailer Freddy and Eddy has a book and video library so customers can try before they buy. "People are stunned that we aren't trying to force them to spend money," says co-owner Ian Denchasy, "and it gives them a reason to visit often."

Retail veteran Kim Airs of GrandOpening.com suggests talking to customers and making recommendations. "Lots of them don't know where to start," she says. "They will come back for more if they like what you give them. Give them a bit of guideline."

To make stores more welcoming for the growing number of women customers in the market, Airs says, store owners should not put up posters that women might find off-putting.

Frequent-buyer programs can work the same way: Simply create a card that is stamped or punched for each purchase and, when full, can be redeemed for an item in the store.

Whatever your plan is, make sure it's easy to manage, track and use. Have the customer fill out a contact-info sheet, and use it to build a promotional mailing list.

 

3) Build trust in your market

Berger emphasizes that building trust in the community has been key in the profitability of Fairvilla's stores. In lieu of traditional advertising methods--which often can be stymied due to the nature of adult products--Fairvilla has found success in running events for the community. The company is not alone; many retailers have followed similar models with equal success.

"You may not be able to buy advertising, but you can have the front page of the newspaper for nothing," Berger says. "We ran a chamber of commerce event with a fashion show, and a dog show. We also host a ladies' night, where we charged money to get in and then gave the money back to the community to build a park." That event garnered front-page coverage.

Hosting events can create a rapport that fuels repeat business. Educational seminars and sexual-health classes have become signature events for stores like The Pleasure Chest, Babeland and Good Vibrations. In turn, some manufacturers offer hands-on seminars on how to use their products, such as Sportsheets' signature swing sets and restraints. Check their websites or ask your salesperson to see what they have available to help you sell their products. Finally, never underestimate the importance of star power. Many adult performers are available for signings. Contact your distributors for touring schedules.

 

4) Make a good appearance

"Consider the customer's experience for each particular part in the store," says Jonathan Plotzker, senior director of e-commerce and merchandising for Good Vibrations. "Do you want to put anal toys next to the door in the bright light of day? The way you use your real estate has to make sense: Adjacencies need to flow properly for the customer."

The designers behind Hustler Hollywood studied the layouts of mainstream stores such as Barnes & Noble and Neiman Marcus before planning their stores. They feature sensual and bath products near the door and harder-edged adult products towards the back, allowing customers to feel safe to come in and explore all of the wares.

Ken Dorfman, national sales manager for mega-manufacturer Doc Johnson, stresses that a clean, well-organized store will increase the bottom line. He believes in a concept called "passive sales," which is all about letting products sell themselves. "The store is the salesman," he says. "We are stores that sell dirty books, not dirty stores that sell books."

Take advantage of all the display tools your distributors offer. When making a display, avoid overwhelming the customer and err on the side of minimalism. Focal points should be at eye level; a jumbled display will deflect customers' eyes. Make note of effective displays you see at mainstream retail stores. Check out décor magazines, and see how they balance colors, shapes and space.

"We are constantly battling our sea of black," says Kenny Soreano, buyer for The Crypt's six costume and novelty stores. Although black and red continue to be his best-selling colors, he said they sell better when he can visually break up displays with items in other colors. "If those other colors don't move, we just put them on sale," he says, since they've already served their purpose as sales tools.

And to guide your customers to your favorite or best-selling products, try creating a "manager's special" or "staff recommendations" section. If customers know that your staff uses the products, they are more likely to trust recommendations and ask questions.

 

5) Be an information center

Good customer service is the surest way to create a loyal, consistent customer base. Greet customers as they enter, then give them some space to explore. Label your products with accurate descriptions and staff recommendations, so that consumers who are too shy to ask can give themselves a tour of your shop.

The more information retailers can make readily available to their customers, the better. Many topics, like strap-on sex, are hard to bring up, explains Julie Stewart, vice president of Sportsheets. "This is why we developed brochures that customers could take home as conversation starters," she says.

Sportsheets also released a DVD showing demonstrations of its products to help retailers-and their customers. Cal Exotics and other high-profile manufacturers have created similar videos that train staff about product use or showcase their products with the consumer in mind.

As a rule, keep signs on the floor simple. Signs that require more information-about store policies and contests, for example-should be placed near the register, where customers spend more time. Handwritten signage adds a personal touch, but it must be legible. For a more professional approach, print one on a computer or use a sign-making kit.

Signs, videos, pamphlets and even loaner books and DVDs like those provided by Freddy and Eddy are all great, but the most important information center should be your employees.

 

6) Take stock in your employees

"I always tell the story of looking through your old high-school yearbooks, and everyone says what they want to do when they grow up," says Mark Franks of retail giant Castle Megastores. "You never see anyone that has said ‘I'd like to work as a clerk in a pornography shop,' so you have to find people that really like being in that environment."

Although many retailers agree that finding employees who are eager to work in an adult environment is easier than it used to be to, hiring them is only half the battle.

"You can't motivate people," Heppenstall says. "You can only put programs into place to help them. Some will take advantage of them, and some won't." She also stresses the importance of creating a manual of policies and procedures. "It's not fun, but it's necessary," she says.

The cure for salesperson's blues is education: Salespeople armed with knowledge tend to share it. "That is why we thoroughly educate our employees," says Dr. Carol Queen of Good Vibrations. "We make sure they're comfortable talking about sexual gratification with people from all walks of life. It takes a special person to do this."

"Our employees have to go through a 30-day test, a 60-day test and then a 90-day test," says Kris Butt, chief financial officer of Peekay. "Then, they're certified and they can sell in the toy department."

"Everybody who works in our stores is considered a sex expert," Plotzker says. "[This] makes them both better salespeople of the products, but they can also actually think of the products and about the industry, in an attempt to understand why a customer might want one product over another."

Dorfman advises hiring confident salespeople. "Work with staff on how to improve sales, and develop a system that helps even the newly hired salesperson be able to sell," he says. "We need to be able to train new employees-often the least competent person on our staff-to operate the system you have in place."

Dr. Charlie Glickman has been helping retailer and manufacturer Good Vibrations take a more direct approach as the education program manager for the company's live, interactive, Web-based retailer-training program, Good Vibrations University.

"It's up to us to stay ahead of the curve," he says, naming that as one reason he helped form GVU. In addition to teaching about sexual anatomy, sex toys, lubrication, condoms, anal sex and sex-positive sales techniques, he says, "our primary goal is to help people increase their sales and boost their confidence through better training."

Stewart of Sportsheets agrees. "Whether or not we hope to be or plan to be sex educators, we are," she says. By training store staff about products, you help them to better serve your customers and offer a viable alternative to online shopping.

 

7) Make it personal

Speaking of online shopping, the tactile experience of a brick-and-mortar store is your strongest defense against Internet competition.

"I find it interesting how displays are really changing," says Brian Robinson, owner of retail legend The Pleasure Chest. "For so long, everything was just kept under glass, and customers had to rely on the clerk to explain everything. There was a real separation there."

Not anymore. Research shows that customers are more likely to buy products they can examine, including testers of lubes and lotions. If you have a choice, stock items that are packaged for easy removal or feature a small "touch window" on sealed packaging, so customers can "try before they buy."

Leslie Shwartzer, Holiday Products' national sales manager, is very picky about packaging. "There's a place for the hardcore, spread-legs stuff, but I think there's broader appeal in more sensual packaging, like the O' My lines," she says. "For point-of-purchase and impulse items, I'm strong on Maximum Control wipes, herbal Viagra-type pills and, of course, Pocket Rockets."

Explaining the unique benefits of certain products can seal the deal, too. "Take Rock Chick from Lover's Choice," Shwartzer says. "At $70, it isn't an easy sell, but the idea of a woman climaxing via her G-spot has an almost mythological reputation. What woman wouldn't at least want to try it?"

If possible, test the product in front of the customer after the sale. "In most states, it's illegal to return a used sex toy," Shwartzer says. "My preference is to test the item during the time of sale: put in the batteries, demonstrate how it works. The customer will be happy for the extra effort and not likely to return it if the toy worked properly in the store."

 

8) Learn the art of the upsell

Upselling is a valuable tool when used properly. Stocking lube near the dildos and putting batteries near the vibrators can passively help. But having proactive salespeople who suggest complementary products at the register will have even better results.

Customers who feel like they've left with more than they expected will come back for more. An easy way to achieve this is to stock items that can be given away or sold as inexpensive add-ons, such as individually wrapped stretchy cock rings or lube samples.

"Folks at the register are a captive audience," Plotzker points out. "Prop up some gift items, small books, condoms and lube, or inexpensive toys. If there's a line, people need something to keep their attention."

"The retailer shouldn't ever let a customer leave without something extra, a bonus [or] freebie that they didn't expect," says Dennis Paradise, owner of condom and lube distributor Paradise Marketing. "During the holidays, give them candy. Everyone likes candy."

Keep in mind that upselling is not limited to complementary products. You also can note the items a customer is considering and point out your higher-priced versions. "All you have to do is put a high-end and low-end version of the same item next to each other, and the high-end item sells itself," Denchasy says. "Ask yourself, ‘Is it a quality toy? Is it aesthetically pleasing?' If not, that customer won't be coming back to us in six months for another toy."

According to Babeland buyer Alicia Relles, women are willing to pay higher prices for "savvy, gorgeous, well-made, versatile toys." She says the store's hottest items right now are "ergonomic luxury vibrators."

Airs agrees. "Don't be afraid to bring in more expensive things, because there are customers out there who will buy them."

9) Manage your inventory

To put it another way, size does matter. "It's about maximizing profits generated by square inches of retail space," Paradise says. "A retailer needs to answer the question ‘Given the square footage of shelf space, are you better off with 60 percent profit times four months or 40 percent profit times 18 months?' It's about merchandise management."

Paradise cites flavored lubes as an example. "Many manufacturers have eight flavors, in up to three styles each. That's 24 SKUs," he notes. "The measurable fact is that, beyond strawberry, the drop-off is so dramatic that the bottom seven are just eating up valuable shelf space."

Pay attention to inventory levels, and stock just enough to fill the shelves. Order regularly, rather than keeping money tied up in inventory.

 

10) Pick the right distributor

"When choosing your distribution company, think about your screening process as if it were an interview process for your next business partner," says Larry Garland, owner of distribution giant Eldorado. In other words, shop around for the right distributor to meet your needs, whether it be a knowledgeable and responsive staff, easy ordering, availability of sales materials, low minimum orders, payment terms, quantity, quality and depth of products, or nearby location. Check in with your distributors often to see what specials, sales materials, product information seminars or adult-star signing tours they may know about, and take advantage of them when you can.

"First, I find out what the retailer is trying to accomplish. Where are they located? What's their primary market?" Shwartzer says.

Just as a waitress always knows what is best from the kitchen, distributors should know what sells best and works best for various markets and have an opinion on what products are their favorites. If they don't volunteer recommendations, be sure to ask. Ideally, your distributor should be able to help you pick the products that are right for your store.

"It's not only about who can give you the best pricing, but who is going to work with you to get you the products you need, when you need them," Plotzker offers. Garland agrees. "A distribution company with the lowest price is not necessarily going to offer the service and personal attention you need," he says. "All too often, retailers learn that the hard way."

 

11) Mind the Law

Laws regarding the sales of adult products vary not only from state to state, but city to city as well, so err on the side of caution and be respectful of state and local laws, Shwartzer advises. Some zoning laws can be downright Draconian, so make it a point to know the legality of what you are selling and where you're selling it. "In certain states, it's not legal to sell realistic penis-shaped dildos," she explains. "There are always alternatives like the Fun Factory line."

Even if you keep your nose clean, there can still be trouble. Retailer Sherri Williams has been fighting the Alabama Supreme Court for more than nine years for the right to sell sex toys in her three Pleasures stores in the state. She recently was denied, for the second time, a hearing by the U.S. Supreme Court.

"What I've learned in all of this is that it is far easier to keep a law from being passed than it is to deal with it once it's already in place," Williams says. In other words, be aware of the legal goings-in in your state and city, and then be proactive about preventing any laws that may negatively impact your business. Which leads us to....

 

12) Be a Good Neighbor

Not only is it important to be attentive to what your city council is up to, but you should also make it a point to get to know the council members as well as other local officials in your area. You and your business can also put your best foot forward though volunteer work, fundraising, and other civic-minded support efforts. Whether you're cleaning up a portion of the local highway or donating time and money to a needy cause, don't underestimate the value of having your store's name appear in a positive light. A little bit of good publicity can turn out to be a big investment in the future of your business.

"Become a valued member of your community," Williams says. "Get to know your local politicians, your chief of police. How they perceive your business goes a long way to what kind of response you are going to get when there's trouble, and you might un-ruffle a few legislative feathers along the way."






Related Content:

Freddy & Eddy
Lover's Choice
Eldorado Trading Company
Fairvilla Megastore
Paradise Marketing
Hustler Hollywood - Sunset Blvd.
Good Vibrations
Castle Megastore - Albuquerque
Holiday Products
Peekay Wholesalers
Babeland
O'My Products Inc.
Doc Johnson
California Exotic Novelties
Sportsheets
The Pleasure Chest
AVN Novelty Expo 2011 (ANE)
Bradley Milton
Jenn Ramsey
Mikey Forrester

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